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NZX today reported its third quarter revenue and operating metrics. Highlights included continued strong growth in its SuperLife and Smartshares businesses, the ongoing positive performance of its dairy derivatives business, and buoyant Farmers Weekly advertising volumes. Total revenues for the quarter were down 4.4%, reflecting a quiet quarter for capital raising activity relative to Q3 2016, which saw substantial new debt listed. A summary of revenue by operating segment is provided below:
Markets
Total revenues in NZX’s Markets business were down 5.8% on Q3 2016. Factors driving our result were:
• 8.7% reduction in listing fees, reflecting lower initial listing fees, with no equity listings in the quarter and $1.1 billion of new debt listed compared to $2.2 billion in the prior year;
• Issuer service fees were also down due to the lower capital raising activity in the quarter;
• Securities information revenue up 10.4%, on growth in professional terminal numbers and high value subscription products;
• Significant growth continued to be realised in dairy derivatives with revenues up 38.4% on higher volumes. This growth rate was lower than for the first half of 2017, as the traditional seasonal peak in early spring was not evident this year due to low volatility in underlying commodity prices this quarter. Year to date derivatives revenue is up 98.1%; and
• Securities clearing revenue was up 4.2% on Q3 2016 as value traded grew 1.9%, and depository and stock lending activity grew.
Funds Services
Revenue in NZX’s Funds Management business, which comprises the SuperLife superannuation and KiwiSaver business and the Smartshares Exchange Traded Funds business, was up 12.3% on Q3 2016. This result was underpinned by growth in:
• SuperLife’s KiwiSaver Funds Under Management (FUM), up 18.7% year on year, while total SuperLife FUM increased 16.8%; and
• 28.8% growth in external Smartshares FUM.
NZX Wealth Technologies revenues were up 4.4% on Q3 2016, as a result of services provided to a new client.
Agri
Total NZX Agri revenues down 17.3% on Q3 2016 as a result of the sale of the Clear Grain Exchange and the magazine publications in Q4 2016. On a like-for-like basis revenues were up 9.8% as advertising page equivalents for the Farmers Weekly were up 14.9% on increasingly buoyant advertising sales and NZ agri data subscriptions grew as a result of multi user sales to corporate customers.
Expenses
Total expenses were down 10.5% on Q3 2016 due to continued disciplined cost control across the Group, and the absence of one-off costs associated with 2016.
Policy & Regulation commentary
During the third quarter of 2017 NZX released a discussion document and survey outlining the proposed scope and areas of focus for its Main Board/Debt Market Listing Rules review. It is now seeking feedback from interested parties. NZX seeks to implement amended rules by the end of 2018, subject to a transition period. NZX is conducting the review in two consultation stages, to participant in the review please see the link below:
https://m.nzx.com/regulation/nzx-rules-guidance/consultation/nzx-listing-rules-review
NZX Regulation published its inaugural Thematic Review, which reports on continuous disclosure practices and conduct. Publication of the Thematic Review was one of the key deliverables highlighted in the 2017 Regulatory Agenda and reflects the continued focus on disclosure by NZX Regulation, and providing best practice support. To read the full review please see the link below:
